Validus Reinsurance, the principal operating subsidiary of Validus Holdings (VR), has been removed from under review by A.M. Best, with negative implications. The rating agency has affirmed the financial strength ratings of “A-" (Excellent) and issuer credit ratings (ICR) of “a-" of Validus Reinsurance Ltd. (Validus). A.M. Best has also removed from under review with negative implications and affirmed the ICR of “bbb-" and the indicative ratings for securities available under the shelf registration of “bbb-" on senior debt, “bb+" on subordinated debt and “bb" on the preferred stock of Validus Holdings. The outlook assigned to the above ratings is “stable". The stable outlook reflects the expectation that operating performance and risk-adjusted capitalization will continue to remain supportive of the current rating levels. IPC Holdings was acquired by Validus on Sep 4. After the acquisition all renewal business will be written ...

XL Capital Group’s (XL) financial strength rating (FSR) of “A" (Excellent) and issuer credit ratings (ICR) of “a" were reaffirmed today by the rating agency A.M. Best. The outlook for all ratings is “stable". The rating reaffirmation is followed by XL’s efforts to restructure its investment portfolio by settling with Syncora Holdings. The company had a disappointing run last year, dragged down by structured-finance losses recorded by Syncora Capital, a bond insurer, of which it was the majority owner. Last October, XL severed its ties with Syncora, a big step in setting a track to recovery. On a year-to-date basis, XL has reduced its exposure to more volatile asset classes by $3.5 billion. XL also implemented expense reduction initiatives in the second half of 2008. It has been streamlining processes across all geographic locations, with a primary emphasis on corporate functions. The company has also ...

The rating agencies have to review their quality control procedure after all the legal hassles they have faced recently. A bill has been placed in the U.S. Senate to review the functioning of the rating agencies. But it is expected that it will be rendered ineffective by the time it reaches the President, and only a part of the problem will be addressed.   Rating agencies such as Fitch, Moody’s Investor Service (MCO), Standard & Poor’s Rating Services, and A.M. Best have recently come up against some strong criticism. This led to the Rating Accountability and Transparency Enhancement Act (RATE) of 2009, which was introduced in May. The bill has been referred to the Senate committee, but has not yet been passed. As per the new bill, the Securities and Exchange Commission (SEC) will be empowered to monitor the functioning of the rating agencies. Besides, both retail and ...

NYM, Nymagic Inc.

XOHO, XO Holdings Inc, XOHO.OB

DrStockPick Watch List!

 

DrStockPick Watch List! for Tuesday August 4, 2009

 

My Picks for Tuesday August 4, 2009 are:

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NYM, Nymagic Inc.

NYM is an insurance holding company that specializes in commercial lines property and casualty and ocean marine insurance, traded on the New York Stock Exchange and is a constituent of the Russell 2000 and the Russell 3000.

NYM owns and operates New York Marine And General Insurance Company, Southwest Marine And General Insurance Company, and Gotham Insurance Company.

The New York Marine Group, composed of NYM’s three insurance company subsidiaries, is rated “A” by A.M. Best.

NYM‘a investment portfolio

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Following FPIC Insurance Group, Inc’s (FPIC) agreement to acquire Advocate, MD and its subsidiaries on July 30, A.M. Best has commented that all the ratings on FPIC and its subsidiaries remain unchanged.  We think that this is primarily to support the company’s acquisition decision.     The all cash deal was signed between FPIC’s subsidiary, First Professionals Insurance Company, Inc., and Advocate, MD Financial Group. Inc. The total deal value includes $33.6 million at closing of the transaction and up to $12.0 million related to the performance of Advocate, MD over the couple of years following the closing of the deal.   As the nature of the business of Advocate, MD is almost similar with FPIC and the deal is consistent with FPIC’s long-term business strategy, we think that FPIC will gain significant scale in its operations by this acquisition. The company will also get advantages of the ...

After the markets closed on July 20, 2009, RLI Corp. (RLI) came out with second quarter 2009 earnings. Results were unfavorably affected by the decline in premiums written, coupled with lower underwriting income. Core earnings shrank to $1.32 per share from $1.53 in the prior-year period. Underwriting income was $25.1 million on an 79.5% combined ratio in 2Q09 compared to underwriting income of $29.1 million on an 78.0% combined ratio in the year-ago quarter. Gross premiums written decreased 3.3% year-over-year to $178.9 million. Net premiums written were $133.9 million, down 1.2% from the prior year quarter, primarily driven by a decrease in casualty writings. The combined ratio (the percentage of premiums an insurer has to pay out in claims and expenses) for 2Q09 slightly improved to 79.5% from 78.0% reported in the prior-year period. During the quarter, the equity in earnings of unconsolidated investee Maui Jim ...

A.M. Best Co. viewed PartnerRe Ltd.’s (PRE) decision to acquire a majority stake in Paris Re on July 5, 2009 as positive for the company.

The all-stock transaction, valued at about approximately $2 billion, will exchange 0.30 of PartnerRe shares for each Paris Re common share outstanding. The deal is expected to be completed in a number of steps. We think this will help PartnerRe’s visibility in a wider market and strengthen its operation to weather the ongoing market volatility.

After reviewing the offer, A.M. Best kept unchanged PartnerRe Group’s and its members’ financial strength rating and issuer credit ratings (ICR) at “A+" and “aa-", respectively. The ICR and debt ratings of the parent company (PartnerRe Ltd) remained unchanged as well. The outlook for all ratings is stable.

The rating agency exudes optimism about the transaction and believes that PartnerRe will gain operating scale through a diversified geography

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Last week, American Physicians Service Group, Inc. (AMPH) announced its inclusion in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3000 U.S. companies that represents about 98% of the investable U.S. equity market. The membership in the Russell 3000 remains in place for one year.

Headquartered in Austin, Texas, AMPH is a leading provider of medical professional liability insurance services for physicians, dentists and other healthcare providers in Texas, Arkansas and Oklahoma. Its insurance subsidiary, American Physicians Insurance Exchange (API), has written business for over 30 years.

Currently, the company insures over 6,200 physicians, dentists, and other healthcare providers, the vast majority of which are in Texas. Its competitors include companies like American Physicians Capital (ACAP), Proassurance (PRA) and FPIC Insurance (FPIC).

A.M. Best has assigned a financial strength rating of A- (Excellent) and issuer credit rating (ICR) of a- to. A.M. Best

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Amerisafe, Inc. (

We maintain our Hold rating on the shares of IPC Holdings Ltd. (IPCR). The company’s operating earnings of $1.62 per share came in significantly ahead of our expectations.

The ongoing turbulence in the credit market had its impact on the investment portfolio. However, we note that there continues to be a number of medium severity catastrophe events around the globe, which could increase premium rates locally in 2008. Though the company has built a track record of strong underwriting results, while maintaining a strong balance sheet and ROE in the mid-teens since its inception, currently we think that the high volatility in its earnings stream based on its near mono-line business model will continue.

We are lowering our 2008 and 2009 earnings expectations to $4.93 per share and $4.55 per share, respectively, from $4.51 per share and $4.45 per share, previously. At the current price, IPC’s shares trade at

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